BENNINGTON -- Despite protests from local landlords and concerns from residents, the Select Board voted Monday five to two in favor of facilitating a $700,000 grant application for Shires Housing, which seeks to build a $5.5 million housing project on Silver Street.

Landlords are worried that the 24-unit project will compete with them for tenants because it can offer lower rents by taking advantage of tax breaks and grants.

Shires Housing went before the board in March to ask the town to be the recipient on its behalf of a community development block grant. Shires Housing Executive Director John Broderick asked for a decision that evening, and won the board's mixed approval, however because there was an omission in the public meeting notice the hearing had to be held again.

The project has been described as "workforce housing." Broderick said renters will have to make enough so that not more than 35 percent of their income goes to rent, but they can not make more than 60 percent of the median income for this area. That puts the income restrictions at between $25,000 and $36,000.

If Shires Housing gets financing and all the permits it needs it will acquire the empty land that's part of Appleridge Condominiums. In 2006, Applejack Real Estate acquired the land there and received permits to built 28 condominiums. According to Broderick, 12 were built. Of those, nine were told, three are rentals, and three remain unsold.

Shires Housing will have to seek an amended permit from the Development Review Board, which will hold a hearing. Planning Director Dan Monks said the purpose of the DRB is to address the impacts on the neighborhood such as traffic, lighting, noise, and the affect on local schools.

A decision will be made on whether or not to award the block grant on June 11 by the Vermont Housing and Conservation Board, which administers the funds for the federal government. No town money is used. Broderick said a request to amend the DRB's original permit would be filed in July, and if approved it would go out to bid in the fall with construction to begin in November.

Local landlord Peter Cross said when Shires Housing rehabilitated properties on Benmont Avenue and built new units on North Branch Street, it cost him and other landlords tenants. He said the projects do not attract new people to the area, but move them around, making it hard for private landlords to keep up their properties and compete.

John Hale, who said he owns 53 rental units in town, said right now he can compete with Shires Housing on rents, but that might not hold true in the future with water rates and taxes climbing. He also claimed that affordable housing projects lower property values, and asked the board to vote no on supporting the grant.

Broderick, who gave a presentation at the start of the hearing, said studies have shown property values around housing projects do not generally go down.

He explained that Shires Housing, because it is under rent controls, is allowed to apply for as much as a 10 percent discount on its state education taxes. The 14 buildings that qualify were assessed at about $4.5 million last year, and with the applied for reduction were taxed at approximately $4.1 million for the state education tax. Broderick said the reduction amounted to Shires Housing paying $6,191 less in taxes than it would have, or about a 5.67 percent reduction.

Landlords who spoke expressed displeasure at Shires Housing's tax situation, saying their only recourse to have taxes lowered is to file a grievance with the town and have their assessments lowered.

Dave Ferguson, a resident of Silver Street, urged the board to vote no, saying the project would not leave enough green space for children, and they would end up playing in the street. Other residents of the area expressed similar concerns about Silver Street, saying it is narrow and heavily trafficked as it is.

About 14 people spoke, three were in favor of the project, saying the current empty space is an eyesore and generating little in tax revenue. They said the other prominent Shires Housing projects have also been good for the area.

Voting against the action to support the grant were board members John McFadden and Justin Corcoran. McFadden took issue with Broderick once again asking for a decision that night, saying he wanted to check Broderick's facts. Board chairman Greg Van Houten said the board has known about this for four weeks now and it is not a new issue.

Corcoran wanted to know what Shires Housing was getting away from doing rehabilitation and into new Housing. Broderick said it is not, and rehab work is mostly what Shires Housing does, but claimed its cheaper to build new and less expensive in the long run on energy costs.

He also questioned Broderick's claims about apartment vacancy rates. Earlier Broderick had said an independent study commissioned by Shires Housing showed Bennington has a 2 percent vacancy rate for rental housing. This reflects a tight market, and according to experts the ideal rate is 5 percent.

Contact Keith Whitcomb Jr. at kwhitcomb@benningtonbanner.com or follow him on Twitter @KWhitcombjr.